Coger v. Nationwide Agribusiness Ins. Co.

• Court: District Court, E.D. California
• Decided: August 6, 2024
• Docket: 2:23-cv-02985
• Status: Unknown

Opinion

6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA 8 9 JOHN COGER, COLLEEN COGER AND 10 THE COGER INTERVIVOS TRUST,

11 Plaintiffs,

12 v. No. 2:23-cv-02985-TLN-CKD 13 NATIONWIDE AGRIBUSINESS INSURANCE COMPANY and DOES 1 14 TO 10 inclusive, ORDER 15 Defendants. 16

18 19 20 This matter is before the Court on Plaintiffs John Coger, Colleen Coger, and The Coger 21 Intervivos Trust’s (collectively, “Plaintiffs”) Motion for Remand and Request for Attorney’s 22 Fees. (ECF No. 11.) Also pending before the Court is Defendant Nationwide Agribusiness 23 Insurance Company’s (“Defendant”) Motion to Dismiss. (ECF No. 22.) Both motions have been 24 fully briefed. For the reasons set forth below, the Court DENIES Plaintiff’s motion to remand 25 (ECF No. 11) and GRANTS Defendant’s motion to dismiss (ECF No. 22). 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 This case arises out of an insurance dispute between Plaintiffs and Defendant after a 3 wildfire destroyed Plaintiffs’ home in Paradise, California on November 8, 2018, in what has 4 become known as the infamous Camp Fire. (ECF No. 18 at 2–3.) 5 At the time of the fire, Plaintiffs’ home was insured through a homeowners’ policy with 6 Defendant which had a $1,440,851 policy limit (the “Subject Policy”). (Id.) Plaintiffs were 7 insured for the “actual cash value” of their home, which covers “the cost to repair or replace 8 Covered Property, at the time of loss or damage, whether the property has sustained partial or total 9 loss or damage, subject to the deduction for deterioration, depreciation and obsolescence.” (Id. at 10 3.) Plaintiffs filed a claim with Defendant after the fire, and Defendant informed Plaintiffs that, 11 per the terms of the Subject Policy, Plaintiffs at the time were not entitled to the full value of their 12 policy limit because the fair market value of their home, not including the land, had decreased to 13 $998,000.00 following the fire. (Id. at 4.) Specifically, per the terms of the Subject Policy, 14 Defendant was able to advance Plaintiffs $1,080,650.00, or 75% of the policy limit, but was 15 “unable to issue any additional payments until the property is repaired or replaced and more than 16 the amount [Defendant] ha[s] issued has been incurred.” (Id.) On April 9, 2019, Defendant 17 informed Plaintiffs that it would be issuing an additional payment of $65,890, but advised Plaintiff 18 that this would be the final payment made by Defendant per the terms of the Subject Policy and 19 closed Plaintiffs’ claim.1 (ECF No. 18-3.) 20 On May 4, 2022, Plaintiffs sent another request to Defendant for unclaimed “Replacement 21 Cost Value” benefits that Plaintiffs believed were owed to them under the Subject Policy. (ECF 22 No. 18-4 at 2.) On October 5, 2022, Defendant denied Plaintiff’s request as untimely. (ECF No. 23 18 at 6.) 24 On October 6, 2023, Plaintiffs initiated this action in state court against Defendant for 25 breach of contract. (ECF No. 1 at 11.) On November 16, 2023, Plaintiffs sent a letter to 26 Defendant, informing Defendant of the lawsuit and requesting the additional $360,201.00 27 Plaintiffs believed they were owed under the Subject Policy. (ECF No. 18 at 6.) On November

28 1 22, 2023, Plaintiffs served the summons from the state court action on Defendant’s agent for 2 service of process. (ECF No. 1 at 2.) 3 On December 21, 2023, Defendant removed the action from state court to this Court based 4 on diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Id. at 1.) After removing this action, 5 Defendant learned for the first time that Defendant’s agent never received a copy of the complaint 6 from Plaintiff. (ECF No. 20 at 2.) On January 8, 2024, Plaintiffs filed the instant motion to 7 remand, arguing Defendant’s removal was untimely and improper. (ECF No. 11.) On January 18, 8 2024, Plaintiffs filed their First Amended Complaint (“FAC”), alleging the following three causes 9 of action against Defendant: (1) breach of contract; (2) breach of the covenant of good faith and 10 fair dealing; and (3) fraud. (ECF No. 18.) On February 1, 2023, Defendant filed the instant 11 motion to dismiss, arguing Plaintiffs’ claims are time barred. (ECF No. 22.) As discussed below, 12 the Court intends to deny Plaintiffs’ motion to remand. Thus, the Court will first address 13 Plaintiffs’ motion to remand (ECF No. 11), before addressing Defendant’s motion to dismiss (ECF 14 No. 22). 15 II. MOTION TO REMAND 16 A. Standard of Law 17 A civil action brought in state court, over which the district court has original jurisdiction, 18 may be removed by the defendant to federal court in the judicial district and division in which the 19 state court action is pending. 28 U.S.C. § 1441(a). The district court has original jurisdiction 20 over civil actions between citizens of different states in which the amount in controversy exceeds 21 $75,000. 28 U.S.C. § 1332(a)(1). Removal based on diversity requires that the citizenship of 22 each plaintiff be diverse from the citizenship of each defendant. Caterpillar Inc. v. Lewis, 519 23 U.S. 61, 68 (1996). Diversity is determined at the time the complaint is filed and removal is 24 effected. Strotek Corp. v. Air Transp. Ass'n of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). For 25 diversity purposes, a corporation is a citizen of the state in which it is incorporated and any state 26 in which it maintains its principal place of business. 28 U.S.C. § 1332(c)(1). An individual 27 defendant's citizenship is determined by the state in which they are domiciled. Kantor v. 28 Wellesley Galleries, Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). 1 “[I]n a case that has been removed from state court to federal court under 28 U.S.C. § 1441 2 on the basis of diversity jurisdiction, the proponent of federal jurisdiction — typically the 3 defendant in the substantive dispute — has the burden to prove, by a preponderance of the 4 evidence, that removal is proper.” Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. 5 Lhotka, 599 F.3d 1102, 1106–07 (9th Cir. 2010). “The preponderance of the evidence standard 6 applies because removal jurisdiction ousts state-court jurisdiction and ‘must be rejected if any 7 doubt as to the right of removal in the first instance.’” Id. (quoting Gaus v. Miles, Inc., 980 F.2d 8 564, 566 (9th Cir. 1992)). “This gives rise to a ‘strong presumption against removal jurisdiction 9 [which] means that the defendant always has the burden of establishing that removal is proper.’” 10 Id. (quoting Gaus, 980 F.2d at 566). 11 B. Analysis 12 In moving to remand, Plaintiffs argue Defendant’s removal was untimely and improper. 13 (ECF No. 11.) Specifically, Plaintiffs argue that Defendant did not timely remove this action 14 after being served. (Id at 6.) Alternatively, Plaintiffs argue that if the Court finds removal was 15 timely, then the Court should still find removal was improper because Defendant removed this 16 action prior to service. (Id. at 7.) Plaintiffs also request attorney’s fees should the Court find in 17 their favor. (Id. at 13–15.) In opposition, Defendant argues its removal was both timely and 18 proper. (ECF No. 20.) 19 i. Timeliness of Removal 20 Under 28 U.S.C. § 1446(b)(1), a defendant's thirty-day window to remove a case to 21 federal court does not begin to run until a plaintiff effects “formal service.” Murphy Bros. v. 22 Michetti Pipe Stringing, Inc., 526 U.S. 344, 347–48 (1999). 23 Plaintiffs argue they completed formal service on November 16, 2023, when they sent 24 Defendant a letter regarding Plaintiffs’ filing of the state court action. (ECF No. 11 at 6.) 25 Defendant did not remove the instant action to this Court until December 21, 2023. (ECF No. 1.) 26 Plaintiffs argue Defendant went beyond the thirty-day removal period authorized by § 1446 27 because thirty-five days passed between service and Defendant’s removal. (ECF No. 11 at 7.) 28 1 In opposition, Defendant argues the thirty-day removal clock never started because 2 Plaintiffs never formally served Defendant. (ECF No. 20.) Specifically, Defendant argues 3 Plaintiff never effectuated formal service because neither Plaintiff’s November 16, 2023, letter 4 nor Plaintiff’s “Notice of Service of Process,” which Plaintiff served on Defendant’s agent on 5 November 22, 2023, included a copy of Plaintiff’s Complaint. (ECF No. 20 at 4.) 6 Because this action was originally filed in California state court, the Court looks to 7 California law to determine whether Plaintiffs properly served Defendant. McGuinn v. City of 8 Sacramento Police Dep’t, No. 2:13-cv-00740-JAM, 2013 WL 3804051, at *2 (E.D. Cal. July 19, 9 2013) (citing Walker v. Armco Steel Corp., 446 U.S. 740, 752 (1980)). California Code of Civil 10 Procedure § 416.10(b) authorizes personal service upon a corporation only by serving a copy of 11 the summons and complaint “[t]o the president, chief executive officer, or other head of the 12 corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a 13 controller or chief financial officer, a general manager, or a person authorized by the corporation 14 to receive service of process.” 15 In the instant case, Plaintiffs concede that neither the November 16, 2023, letter nor the 16 “Notice of Service of Process” contained a copy of their Complaint. (ECF No. 11 at 7.) While 17 Defendant eventually retained a copy of Plaintiff’s Complaint, “[t]he Supreme Court has 18 explained that ‘a named defendant's time to remove is triggered by simultaneous service of the 19 summons and complaint, or receipt of the complaint, through service or otherwise, after and apart 20 from service of the summons, but not by mere receipt of the complaint unattended by any formal 21 service.’” Quality Loan Serv. Corp. v. 24702 Pallas Way, Mission Viejo, CA 92691, 635 F.3d 22 1128, 1133 (9th Cir. 2011) (quoting Murphy, 526 U.S. at 347–48). Thus, the thirty-day removal 23 clock does not begin to run until a defendant is “notified of the action, and brought under the 24 court’s authority by formal process.” Murphy, 526 U.S. at 347. Given Plaintiffs never completed 25 formal process on Defendant by providing Defendant with a copy of the Complaint pursuant to 26 California Code of Civil Procedure § 416.10(b), the Court finds Defendant’s removal was not and 27 could not be untimely because the removal clock never started.2

28 1 ii. Whether Pre-Service Removal is Proper 2 Next, Plaintiffs argue that, should the Court find Defendants have not been served, the 3 Court should still remand this case because pre-service removal is improper. (ECF No. 11 at 11– 4 13.) However, Plaintiffs fail to cite authority to support this proposition, and the Court is 5 unaware of any authority that holds a removal is invalid simply because it occurred prior to 6 service. 7 Indeed, district courts across the Ninth Circuit have held that a defendant may remove a 8 lawsuit before being served with either a complaint or summons. Rogers v. Washington Mut. 9 Bank, No. 221CV2151JAMKJNPS, 2022 WL 396598, at *4 (E.D. Cal. Feb. 9, 2022) (finding 10 pre-service removal is proper under 28 U.S.C. Section 1441 so long as there is a federal question 11 or to complete diversity of the parties and amount exceeding $75,000); Kuchta v. Nat’l R.R. 12 Passenger Corp., No. 22-CV-02198-JCS, 2022 WL 3650734, at *4 (N.D. Cal. Aug. 24, 2022) 13 (holding that because plaintiff brought his case in state court and named the defendant as a party, 14 the defendant “was entitled to remove the case under Section 1441(a) regardless of whether it had 15 been served at the time of removal”); Fontalvo ex rel. Fontalvo v. Sikorsky Aircraft Corp., No. 16 13-CV-0331-GPC-KSC, 2013 WL 3197071, at *10 (S.D. Cal. June 20, 2013) (stating that 17 defendant had standing to remove suit prior to being served because the case had been initiated in 18 state court); Watanabe v. Lankford, 684 F. Supp. 2d 1210, 1214 (D. Haw. 2010) (“A complaint 19 need only be filed to be removable.”). 20 Plaintiffs argue these cases are distinguishable in that “none of the plaintiffs affirmatively 21 withheld service until the complaint was ready for service” and “Plaintiffs should be allowed to 22 litigate the complaint they choose, not the version they are stuck with because the defendant 23 removed it before they could amend.” (ECF No. 11 at 12–13.) Plaintiffs’ argument is puzzling. 24 Specifically, Plaintiffs fail to explain how their desire to amend their complaint is a relevant 25 factor for removal under 28 U.S.C. § 1441(a). Indeed, Plaintiffs filed their First Amended 26 Complaint (“FAC”) on January 18, 2024. (ECF No. 18.)

27 their Notice of Removal outside the thirty-day removal period. (ECF No. 11 at 9–10.) However, given the Court finds Plaintiffs never triggered the removal clock, Defendant’s amendment of its 28 1 As such, the Court sees no basis to depart from the reasoning of other district courts given 2 this action was pending in state court at the time of removal, it is undisputed this action involves 3 more than $75,000 in controversy, and there is complete diversity between the parties. (ECF No. 4 21 at 1) (“Plaintiffs concede there is a jurisdictional basis for removal based on complete diversity 5 (California v. Iowa) and the amount in controversy (in excess of $75,000).”). 6 Accordingly, the Court finds Defendant’s pre-service removal was proper under 28 U.S.C. 7 § 1441 and DENIES Plaintiffs’ motion to remand. 8 iii. Attorneys’ Fees 9 Plaintiffs also argue they are entitled to $13,125 in attorney’s fees for bringing the instant 10 motion to remand. (ECF No. 11 at 14.) “An order remanding the case may require payment of 11 just costs and any actual expenses, including attorney fees, incurred as a result of removal.” 28 12 U.S.C. § 1447(c). “Absent unusual circumstances, courts may award attorney’s fees under § 13 1447(c) only where the removing party lacked an objectively reasonable basis for seeking 14 removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). In the instant case, the 15 Court finds there was an objectively reasonable bases for seeking removal because the Court has 16 found Defendant’s removal was proper. Evans v. FCA US LLC, No. 2:16-CV-01094-TLN-AC, 17 2018 WL 1940955, at *4 (E.D. Cal. Apr. 25, 2018) (denying attorneys’ fees because removal was 18 proper). Accordingly, the Court DENIES Plaintiffs’ Request for Attorney’s Fees. 19 III. MOTION TO DISMISS 20 A. Standard of Law 21 A motion to dismiss for failure to state a claim upon which relief can be granted under 22 Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th 23 Cir. 2001). Rule 8(a) requires that a pleading contain “a short and plain statement of the claim 24 showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a); see also Ashcroft v. Iqbal, 556 25 U.S. 662, 677–78 (2009). Under notice pleading in federal court, the complaint must “give the 26 defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic v. 27 Twombly, 550 U.S. 544, 555 (2007). 28 On a motion to dismiss, the factual allegations of the complaint must be accepted as true. 1 Cruz v. Beto, 405 U.S. 319, 322 (1972). A court must give the plaintiff the benefit of every 2 reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail 3 Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege 4 “‘specific facts’ beyond those necessary to state his claim and the grounds showing entitlement to 5 relief.” Twombly, 550 U.S. at 570 (internal citation omitted). 6 Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 7 factual allegations.” U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While 8 Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the 9 defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient 10 if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of 11 action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the 12 elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Thus, 13 “[c]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to 14 dismiss” for failure to state a claim. Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004) 15 (citations omitted). 16 Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 17 facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim 18 has facial plausibility when the plaintiff pleads factual content that allows the court to draw the 19 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 20 680. While the plausibility requirement is not akin to a probability requirement, it demands more 21 than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. Only where a plaintiff 22 fails to “nudge [his or her] claims ... across the line from conceivable to plausible[,]” is the 23 complaint properly dismissed. Id. at 680 (internal quotations omitted). 24 If a complaint fails to state a plausible claim, “‘[a] district court should grant leave to 25 amend even if no request to amend the pleading was made, unless it determines that the pleading 26 could not possibly be cured by the allegation of other facts.’” Lopez v. Smith, 203 F.3d 1122, 1130 27 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). 28 /// 1 A statute of limitations defense may be raised by a motion to dismiss “[if] the running of 2 the statute is apparent on the face of the complaint.” Ledesma v. Jack Stewart Produce, Inc., 816 3 F.2d 482, 484 n.1 (9th Cir. 1987); Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980). 4 However, a complaint may not be dismissed unless it appears “beyond doubt” that plaintiffs can 5 prove no set of facts that would establish the timeliness of the claim. Hernandez v. City of El 6 Monte, 138 F.3d 393, 402 (9th Cir. 1998). 7 B. Analysis 8 Defendant argues the Court should dismiss Plaintiffs’ FAC because all of Plaintiffs’ claims 9 are untimely and barred based upon the plain language of the Subject Policy. (ECF No. 22.) 10 Specifically, the Subject Policy requires that persons seeking to bring legal action against 11 Defendant must file suit “within two years after the date on which the direct physical loss or 12 damage occurred.” (ECF No. 18-1 at 56) (emphasis added). Defendant argues Plaintiffs’ claims 13 are time-barred because “[d]espite this two year suit limitation, [P]laintiffs belatedly filed this 14 action on October 6, 2023, nearly five years after the loss or damage occurred, and more than four 15 years after [Defendant] gave [P]laintiffs written notice that their claim was closed.” (ECF No. 22 16 at 4.) 17 Plaintiffs make four arguments in opposition. (ECF No. 24.) First, Plaintiffs argue the 18 two-year limitation does not apply because Defendant did not provide Plaintiffs with sufficient 19 notice of the filing limitation. (Id. at 8.) Second, Plaintiffs argue their suit is timely based upon 20 the four-year statute of limitations for contract claims. (Id. at 11.) Third, Plaintiffs argue 21 California Judicial Council Emergency Rule 9 (“Emergency Rule 9”) tolled the two-year 22 contractual limitations period. (Id. at 11–12.) Fourth, Plaintiffs argue the Court should toll the 23 limitation period due to “delayed discovery.” (Id. at 12.) The Court will address each of 24 Plaintiffs’ arguments in turn. 25 /// 26 /// 27 /// 28 /// 1 i. Notice 2 Plaintiffs argue The Fair Claims Settlement Practices Regulations estop Defendant from 3 asserting that Plaintiffs’ claims are untimely because Defendant never informed Plaintiffs of the 4 two-year contractual limitation. (ECF No. 24 at 7–11.) The Fair Claims Settlement Practices 5 Regulations require insurers to inform insureds about applicable time limits relative to their 6 claims. See Cal. Code Regs., tit. 10, § 2695.4 (“No insurer shall misrepresent, conceal or fail to 7 disclose to a first party claimant or beneficiary all benefits, coverages, time limits and other 8 provisions of any insurance policy ...”). Plaintiffs argue the California Court of Appeals, 9 applying § 2695.4, has held that insurers are equitably estopped from asserting a contractual 10 limitation defense when the insured does not advise the insured of the limitations period. (ECF 11 No. 24 at 8) (citing Spray, Gould & Bowers v. Associated Internat. Ins. Co., 71 Cal.App.4th 1260, 12 1263 (1999)). According to Plaintiffs, Defendant's failure to give Plaintiff specific notice of the 13 two-year contractual limitation should estop Defendant from relying on such a limitation based on 14 Spray. (Id.) 15 Defendant argues Spray and its progeny are inapplicable because their holdings only 16 apply to instances where an insured’s claim is denied by the carrier. (ECF No. 28 at 8.) By 17 contrast, in the instant case, Defendant did not deny Plaintiffs’ claim, rather Defendant reached a 18 settlement with Plaintiffs regarding their claim and what they were entitled to under the Subject 19 Policy as described in Defendant’s April 19, 2019 letter to Plaintiffs. (Id.) According to 20 Defendant, no regulation, statute, or case law requires an insurer in California to provide written 21 notice of a contractual limitations period when the insurer reaches such settlements with its 22 insured. (Id.) Specifically, Defendant cites the Standard for Prompt, Fair and Equitable 23 Settlements, which provides that: 24 Except where a claim has been settled by payment, every insurer shall provide written notice of any statute of limitation or other time 25 period requirement upon which the insurer may rely to deny a timely claim. 26 27 Cal. Code Regs., tit. 10, § 2695.7(f). Additionally, the California Court of Appeals has found § 28 2695.7’s reference to requiring written notice of “any statute of limitation or other time period 1 requirement” includes contractual limitations periods as well. Superior Dispatch, Inc. v. Ins. 2 Corp. of New York, 181 Cal.App.4th 175, 188–89 (2010). Indeed, district courts in the Ninth 3 Circuit have found that based upon the language of § 2695.7(f) an insurer is not estopped from 4 asserting a statute of limitations or contractual limitations defense where an insurer settled a 5 plaintiff’s claim. See First v. Allstate Ins. Co., No. CV 98-3394 RJK, 2000 WL 33122757, at *4 6 (C.D. Cal. Dec. 20, 2000) (“It is undisputed that Plaintiffs' claim was settled by payment. Allstate 7 is not estopped from asserting the statute of limitations defense on this ground.”); see also SEMX 8 Corp. v. Fed. Ins. Co., 398 F. Supp. 2d 1103 (S.D. Cal. 2005) (citing Cal. Code Regs., tit. 10, § 9 2695.7(f)) ([T]he California insurance regulations do not require Defendant to provide notice of 10 limitations provision where a claim is settled.”). 11 While Plaintiffs concede they received Defendant’s April 9, 2019, letter, Plaintiffs argue 12 their claim was never settled and “[a]t most was closed for the time being, awaiting further word 13 about [Replacement Cost Value]” benefits under the Subject Policy. (ECF No. 24 at 9.) In 14 response, Defendant argues Plaintiffs’ contention is unsupported because the April 20, 2019, 15 letter clearly states that Defendant settled Plaintiffs’ claim and Plaintiffs’ “claim is now closed.” 16 (ECF No. 28 at 8 (citing ECF No. 18-3).) Defendant further argues Plaintiffs “have proffered no 17 alternative explanation by which the term ‘closed’ is reasonably capable of meaning ‘open.’” Id. 18 The Court agrees with Defendant. Plaintiffs offer no documentation or authority by which 19 the Court could interpret the April 19, 2019, letter to mean Defendant did not issue final payment 20 to Plaintiff and settle Plaintiff’s claim. Indeed, the April 9, 2019, letter explicitly states, “We’re 21 writing to let you know we settled your Farmowners claim and will be sending CVE Demolition a 22 check for $65,890.00.” (ECF No. 18-3 at 2.) Moreover, Plaintiffs do not cite, and the Court is 23 unaware of, any authority where a court extended the holding in Spray to cases where an insurer 24 accepts coverage and settles an insured’s claim. 25 Therefore, in the face of § 2695.7(f) exemption for insurers from noticing insureds of the 26 contractual limitations period and without any case law directly requiring such disclosure, the 27 Court finds Defendant’s failure to provide specific notice of the two-year contractual limitations 28 period to Plaintiffs does not estop Defendant from asserting Plaintiff’s claims are untimely. 1 ii. Four-Year Limitation Period 2 Next, Plaintiffs argue that even if the April 9, 2019, letter closed their claim, their lawsuit 3 is still timely because “the Complaint was filed within the four-years of April 9, 2019 pursuant to 4 Code of Civil Procedure § 337.” (ECF No. 24 at 11.) In response, Defendant argues that the 5 Subject Policy’s two-year contractual limitations period is enforceable and favored under 6 California Law over Code of Civil Procedure § 337’s general four-year limitations period for 7 contract claims. (ECF No. 28 at 9.) 8 Specifically, Defendant cites California Insurance Code § 2071 (“§ 2071”), which applies 9 to insurance policies that provide coverage for losses caused by fire and states: “No suit or action 10 on this policy for the recovery of any claim shall be sustainable in any court of law or equity 11 unless all the requirements of this policy shall have been complied with, and unless commenced 12 within 12 months next after inception of the loss.” Based upon § 2071 and the language in the 13 Subject Policy, Defendant argues Plaintiffs had two years to bring this action, not four years. 14 (ECF No. 28 at 10.) 15 The Court agrees with Defendant. In Prudential–LMI Com. Insurance v. Superior Court, 16 the California Supreme Court held that it was the specific intent of the California Legislature to 17 provide a shortened limitation for insureds to sue on fire policies under California Insurance Code 18 § 2071, despite the four-year limitations period for other contractual disputes under Code of Civil 19 Procedure § 337. 51 Cal. 3d 674, 691 (1990) (“[W]e conclude the Legislature’s intent to provide 20 insureds with a full year (excluding the tolled period) in which to commence suit can be inferred 21 from the fact that the period provided by section 2071 is considerably shorter than the usual four 22 years for ordinary contracts (Code Civ. Proc., § 337) ....”); see also Vu v. Prudential Prop. & Cas. 23 Ins. Co., 26 Cal. 4th 1142, 1148 (2001) (stating the “ordinary” statute of limitations period for 24 breach of contract is four years; “[i]nsurance claims for property damage, however, have a one- 25 year limitation period.”). 26 Moreover, where, as in the instant case, the policy insures against other perils as well as 27 fire loss, the terms of policy may vary if the coverage provided is equivalent or more favorable to 28 the insured. (Ins. Code, § 2070; Fire Ins. Exchange v. Superior Court 116 Cal.App.4th 446, 459 1 (2004)). Thus, California Courts have found the inclusion of a two-year limitation period does 2 not violate § 2071, as it is more favorable to the insured. Doheny Park Terrace Homeowners 3 Assn., Inc. v. Truck Ins Ins. Exch., 132 Cal. App. 4th 1076, 1085 n. 9 (2005). 4 In contrast, Plaintiff provides no authority which explains why this Court should disregard 5 the Subject Policy’s two-year limitation period and instead apply Code of Civil Procedure § 337’s 6 general four-year limitations period for contract claims. Indeed, [s]uch a covenant shortening the 7 period of limitations is a valid provision of an insurance contract and cannot be ignored with 8 impunity ….” Prudential-LMI, 51 Cal. 3d at 691 (quoting Fageol T. & C. Co. v. Pacific 9 Indemnity Co., 18 Cal. 2d 748, 753 (1941)). Thus, given the clear preference in California Courts 10 to apply a shortened limitation period for insureds to sue on fire policies over Code of Civil 11 Procedure § 337’s general four-year limitations period for contract claims, the Court finds Code 12 of Civil Procedure § 337’s general four-year limitations period for contract claims does not apply 13 to the instant action. 14 iii. Emergency Rule 9 15 Next, Plaintiff argues Emergency Rule 9, which tolled the statute of limitations on all civil 16 actions for 178 days in light of the COVID-19 pandemic, tolls the period of limitations in this 17 action. (ECF No. 24 at 11.) However, Defendant argues, regardless of 178 tolling days not being 18 enough time to make Plaintiffs’ claims timely, Emergency Rule 9 is inapplicable because it 19 governs statutes of limitations, not contractual limitations. (ECF No. 28 at 10–12.) The Court 20 agrees with Defendants. 21 Emergency Rule 9 states, “Notwithstanding any other law, the statutes of limitations and 22 repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 23 1, 2020.” Judicial Council of Cal., Emergency Rules Related to COVID-19, Rule 9. The Judicial 24 Council Advisory Committee Comment states that “Emergency [R]ule 9 is intended to apply 25 broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil cause 26 of action.” Judicial Council of Cal., Advisory Comm. Comment to Emergency Rule 9 (emphasis 27 added). Plaintiffs fail to cite to any authority supporting the application of Emergency Rule 9 28 applies to contractual limitations. In contrast, in Scollard v. State Farm Gen. Ins. Co., the court 1 found a “common sense” interpretation of Emergency Rule 9 and its Comment does not support a 2 finding that Emergency Rule 9 applies to contractual limitations. No. CV 21-06145 PSG PVC, 3 2023 WL 5543975, at *6 (C.D. Cal. July 7, 2023) (“Rule 9 clearly specifies that ‘statutes of 4 limitations’ are tolled, ‘notwithstanding any other law.”) (quoting Emergency Rule 9). 5 Thus, in the absence of any authority applying Emergency Rule 9 to contractual 6 limitations, the Court cannot find that Emergency Rule 9 tolled Plaintiffs’ filing limitation. 7 iv. Delayed Discovery 8 Finally, Plaintiffs argue the contractual limitation period for their claims should be tolled 9 based upon the delayed discovery rule. (ECF No. 24 at 12.) Pursuant to the “delayed discovery 10 rule,” the accrual of a cause of action is postponed until the “plaintiff discovers, or has reason to 11 discover, the cause of action.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 807 (2005). 12 To invoke the “delayed discovery” rule, a plaintiff must plead facts which show “(1) the time and 13 manner of discovery and (2) the inability to have made earlier discovery despite reasonable 14 diligence.” Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1134, 1141 (C.D. Cal. 2010) (quoting 15 Saliter v. Pierce Bros. Mortuaries, 81 Cal. App. 3d 292, 296 (1978)). 16 In the instant case, Plaintiffs allege they were not aware of their potential claims against 17 Defendant until 2022 when Plaintiffs’ attorney discovered Defendant allegedly “shorted” 18 Plaintiffs $360,201.00 under the terms of the Subject Policy. (ECF No. 24 at 12.) However, a 19 plaintiff is “charged with presumptive knowledge of an injury if they have information of 20 circumstances to put [them] on inquiry or if they have the opportunity to obtain knowledge from 21 sources open to [their] supervision.” Fox, 35 Cal. 4th at 807–08. “An insured who is aware of 22 the essential facts cannot toll the statute of limitation by contending that he only belatedly 23 discovered his policy might provide coverage because knowledge of the facts, rather than 24 knowledge of the available legal theories or remedies, starts the state of limitations.” Love v. 25 Fire Ins. Exchg., 221 Cal. App. 3d 1136, 1143 (1990). Because Plaintiffs were in possession of 26 the Subject Policy and its terms since the policies inception and were aware since April 9, 2019, 27 that Defendant closed their claim, the Court finds that reasonable diligence would have enabled 28 Plaintiffs to discover Defendant’s alleged wrongdoing. 1 Accordingly, the Court GRANTS Defendant’s motion to dismiss (ECF No. 22) because 2 | Plaintiffs’ claims are untimely and barred by the Subject Policy’s two-year limitation period. 3 | Although the Court finds Plaintiffs failed to state a timely claim on the face of their FAC and has 4 || serious doubts regarding Plaintiffs’ ability to cure this deficiency, the Court will give Plaintiffs an 5 | opportunity to amend based on the liberal standard in favor of granting leave to amend. See Moss 6 | v. U.S. Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009) (“Courts are free to grant a party leave to 7 || amend whenever justice so requires, and request for leave should be granted with extreme g | liberality.”). 9 IV. CONCLUSION 10 For the foregoing reasons, the Court hereby DENIES Plaintiffs’ Motion to Remand (ECF 1] | No. 11) and GRANTS Defendant’s Motion to Dismiss (ECF No. 22) with leave to amend. 12 | Plaintiffs may file an amended complaint not later than thirty (30) days for the electronic filing 13 | date of this Order. Defendant’s responsive pleading is due twenty-one (21) days after Plaintiffs 14 | file their amended complaint. If Plaintiffs opt not to file an amended complaint, the Court will 15 | dismiss this action and close the case. 16 IT IS SO ORDERED. 17 | Date: August 5, 2024 18 /) 19 “ \/ fb

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